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Bethlehem Works derailed; ISG opens land to new offers
The developer that once had the inside track to build the Bethlehem Works retail, entertainment and residential complex on former Bethlehem Steel property has no sales agreement and no exclusive right to buy the land.
That opens the bidding on the 120-acre South Side site to any developer, including one that may not be bound by the vision of building the $160 million project to complement a proposed museum of industrial history.
The Bethlehem Works and museum projects have languished since the longtime No. 2 U.S. steelmaker first envisioned them eight years ago.
Delaware Valley Real Estate Investment Fund of Philadelphia had a handshake deal in early 2003 to buy the land from bankrupt Bethlehem Steel Corp., whose assets were bought in May 2003 by International Steel Group of Cleveland.
''There have been expressions of interest from other people. We are not operating under an exclusivity agreement,'' said Roger Ochse, who is handling the sale of former Steel land now owned by ISG. ''More importantly, we want to make sure something happens with the property.''
ISG officials have said they support the Bethlehem Works project as originally envisioned, but have made no promises.
Delaware Valley's lack of a binding agreement upsets the playing field for Bethlehem, which wants to use part of the site for a minor league baseball stadium affiliated with Major League Baseball.
Proposals are expected to be submitted soon to Gov. Ed Rendell, who has pledged up to $12 million in state funding to build a stadium in either Bethlehem, Allentown or Williams Township.
''Time is of the essence, because we have to make decisions on the site for the baseball stadium,'' said Mayor John Callahan. ''Having this uncertainty out there just complicates things.''
Ochse said Delaware Valley Real Estate's handshake deal with Bethlehem Steel didn't translate into a sales agreement with ISG.
''There was a point a year ago where Bethlehem Steel and Del Val, in effect, had a deal,'' Ochse said. ''Time and the bankruptcy process and ISG's acquisition, all those things, sort of overran it.''
City of Bethlehem officials had high hopes that Delaware Valley would develop Bethlehem Works. The developer said in February 2003 that it expected to close the deal ''within a week'' for the land at the far western end of former Steel property.
Since then, sporadic negotiations failed to produce an agreement, while Delaware Valley trumpeted plans and forged a partnership with Northampton Community College to open a satellite campus in Steel's old annex building.
Delaware Valley gave most public officials the impression that development was imminent. City Council even endorsed a ''cooperation agreement'' with the company at a meeting Feb. 18, 2003.
At the same time, ISG was negotiating to sell the 120 acres to another developer, Preferred Real Estate Investment of Conshohocken, which restores old industrial and historic structures and leases them to office tenants.
In June, Preferred Real Estate sued ISG in federal court, saying the steelmaker failed to negotiate in good faith. The developer claims the two sides had agreed on a $4 million sale price for the entire Bethlehem Works land and the adjoining Bethlehem Commerce Center tract, which was slated for development as a 1,600-acre business park. But ISG felt compelled by city and state officials to take Delaware Valley as the developer, according to ISG's response to the suit.
''Because of the commonwealth's position and the accompanying political pressure that ISG encountered, ISG could no longer continue to negotiate the potential sale of Bethlehem Works to ,'' according to a July 2003 pleading filed in U.S. District Court in Philadelphia.
Bethlehem Steel had been negotiating a sale to Delaware Valley, the legal papers say, ''and the city wanted ISG to pursue continuing such negotiations.''
Repeated phone calls to Delaware Valley Real Estate officials and state Rep. T.J. Rooney, a Democrat whose 133rd District includes the Bethlehem Works site and who has acted as a spokesman for the developer, were not returned Wednesday and Thursday.
Attorney Matthew Taylor, who represents Preferred Real Estate in the suit, declined to comment, saying only, ''I think the pleadings speak for themselves.''
Preferred Real Estate had an agreement with Bethlehem Steel four years ago to buy and renovate the former Steel annex building, but the deal fell through months after it was announced.
Bethlehem Works and the Bethlehem Commerce Center have been viewed as critical components in revitalizing the city ever since Bethlehem Steel stopped making steel locally in 1996. The two projects represent 20 percent of the city's taxable land.
Lehigh Valley Industrial Park has agreed to buy 1,200 acres for the Commerce Center and landed U.S. Cold Storage as its first tenant.